5 Reasons Why Theresa May Suddenly Wants a Snap Election

After nine months of saying nothing was further from her mind, U.K. Prime Minister Theresa May has called for a snap general election on June 8. The motion dissolving parliament will likely muster the required two-thirds majority because the biggest opposition party, Labour, has said it will vote in favor. But why the change of heart, and what could be the consequences, especially for the all-important negotiations over the Brexit settlement?

1. A Personal Mandate

The nine months since May became PM have shown her how difficult it is to govern without a personal mandate. She owes her position entirely to the Conservative lawmakers who chose her to succeed David Cameron after his Brexit referendum gamble blew up in his face last year. Since then she has chosen a course (the so-called ‘Hard Brexit’) that appeals to the right wing of her own party and the anti-immigrant part of U.K. public opinion, but which is deeply unpopular with business and with much of the country. Given that she has to deliver a deal that will be as complex as it is controversial, she desperately needs a mandate of her own from voters to bolster her authority.

May’s Conservatives currently have only a 17-seat majority in the 650-seat House of Commons. That leaves her vulnerable to revolts from even a small number of lawmakers, especially those willing to cry foul at anything that smells of compromise or delay. A bigger majority would theoretically protect her from such revolts, and give her greater freedom to negotiate—for instance—the “Brexit Bill,” the financial settlement that Britain will have to pay to settle its accounts with the EU before it leaves. By contrast, if her domestic position leaves her unable to make reasonable concessions, then the already-high risk of leaving the EU without a fall-back arrangement—and the much-feared ‘cliff-edge effects’ on the economy—rises to nearly 100%.

3. Electoral Logic Is Irresistible

The opposition is disorganized. Britain’s electoral system, like the U.S.’s, runs on a winner-takes-all, or ‘first-past-the-post,’ basis. There is no proportional representation. An opinion poll by YouGov this weekend gave the Conservatives a 21-point lead over Labour, its traditional opposition. That is a recipe for a landslide. Labour is bitterly divided between the hard-left leadership team of Jeremy Corbyn and a globalist coterie of liberal lawyers and financiers that harnessed the working class vote under former Prime Minister Tony Blair. At the same time, the U.K. Independence Party is dwindling into irrelevance now that May’s Conservatives have embraced its core aim of leaving the EU. The only real risk to May’s gamble is that pro-Remain Tory voters will either stay at home or defect to more sympathetic centrist or center-left candidates.

The reason May gave today was that she wanted to silence and neutralize those who are trying to stop or reverse the Brexit process. But such opposition—from Scottish Nationalists, the House of Lords and pro-Remain lawyer and financiers—was predictable back in July when May took over, so that’s obviously not the decisive reason.

May couldn’t call an election before she had settled her own party’s internal debate on Brexit. Plus, it’s quickly become clear that she won’t be able to tie up a deal on the U.K.’s long-term trade relationship with the EU before 2020, when the next general election would have to be held anyway. Winning a new five-year mandate will reduce the pressure on her in 2019, when the negotiations on the separation agreement have to be finalized. That should logically allow her to be firmer in negotiations with the EU, albeit the cards are still stacked against her. Thirdly, there are increasing signs that the economy is slowing down, as the Brexit outlook weighs on business and consumer confidence, and the pound’s depreciation feeds through into higher inflation. She may well have wanted to face the voters before things get any worse.

There are also issues only indirectly related to Brexit. The biggest is that May needs to escape the tax and spending commitments made by Cameron before the last election since the government now expects lower growth and a higher budget deficit through 2020 because of Brexit. Two issues stand out: a commitment not to raise tax and other levies on income, and another one to raise pensions by a minimum 2.5% a year regardless of inflation or average earnings. Treasury chief Philip Hammond tried to break the first in his first annual budget last month, but was embarrassingly forced to back down. The second was an unaffordable luxury even before Brexit forced the government to revise down its growth assumptions for the next five years. That will also mean higher borrowing and another threat to the Conservatives self-proclaimed reputation for fiscal competence and responsibility.

SPONSORED FINANCIAL CONTENT

You May Like

Read More

Sign Up for Our Newsletters

Sign up now to receive FORTUNE's best content, special offers, and much more.